Mid- and small-caps may gain from broader recovery but won't come cheap

Take limited exposure to these stocks and opt for the fund route if you aren't adept at direct investing

Sanjay Kumar Singh | New Delhi
Last Updated at February 7, 2021 20:27 IST

broker, market, shares, trading, stocks, growth, profit, loss, exchange, brokerage

The BSE Midcap and the Small-cap Index have run up 25.3 per cent and 31.3 per cent respectively over the past year

With the Sensex touching the 50,000 mark recently, there is fear among market participants that equities may have become overpriced. Nonetheless, one category that is being pitched actively to investors is mid- and small-cap funds. The rationale being advanced is that earnings of mid- and small caps tend to rise sharply during a broad-based economic recovery. Investors need to understand the opportunities and risks in these segments fully before entering them.

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